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9 Signs That The Price Of Oil In 2011 Will Soar Well Beyond 100 Dollars A Barrel

By Michael Snyder, on December 28th, 2010

Will we see the price of oil rise significantly in 2011? Unfortunately, that appears to be precisely where we are headed. Despite stubbornly high unemployment and a very sluggish economy in the United States, the price of oil continues to creep upward. Part of it can be attributed to the fact that the U.S. dollar and other major currencies are continuing to lose value relative to all commodities, and part of it can be attributed to the continuing rise in the global demand for oil. But those factors alone do not explain what we are seeing. Expectations are a very powerful thing, especially for financial markets, and right now there is an overwhelming consensus that oil prices are going to rise in 2011. The big oil companies, the big oil exporting nations and the big investment banks are nearly all in agreement that a higher price for oil is coming and the speculators smell money and are starting to jump on to the bandwagon.

Those who “play the game” in the financial markets are always looking for the next big trend. Right now, a whole lot of people are talking about oil being one of those trends. It is considered to be a “hot” investment for 2011, and unfortunately the underlying economic fundamentals seem to support a higher price for oil.

The following are 9 signs that the price of oil in 2011 will soar well beyond 100 dollars a barrel….

#1 Over the last couple of months, a clear trend of rising oil prices has been established. Crude oil futures for January hit a two-year high of $91.51 a barrel at the end of last week. This represents a 13 percent increase in just the last month.

#2 Usually it is the summer months when we see higher prices for gasoline, but right now gas prices are rising aggressively as we start the winter. The average price of a gallon of gasoline in the United States recently crossed the 3 dollar mark for the first time in more than two years according to AAA’s Daily Fuel Gauge Report. The last time that gas was more than 3 dollars a gallon during the third week of December was in 2007 just months before “the greatest financial crisis since the Great Depression” struck.

#3 The worldwide demand for oil just continues to increase. But unlike previous times, now much of the increase in demand is coming from emerging markets. Did you know that America is not the number one consumer of energy in the world anymore? For about a hundred years the United States used more energy than anyone else, but now the biggest consumer of energy on the globe is China.

#4 Much of what we are seeing the price of oil do now is simply the continuation of a major upward trend that was interrupted by the financial crash of 2008. Just check out the chart posted below. Clearly the long-term trend for oil is moving up….

#5 Part of the reason why oil is going up is because the value of the dollar is going down. The rest of the world has reacted very negatively to the quantitative easing program initiated by the Federal Reserve, and as the Fed continues to flood the financial system with dollars it is only inevitable that the price of just about everything, including oil, will continue to go up.

#6 The speculators smell money and they are beginning to pour into the market. Speculative longs currently far outnumber speculative shorts. According to the Commodity Futures Trading Commission, long positions in oil outnumbered short positions by 205,890 contracts at one point in mid-December. That should be a clear sign that investors do not expect the price of oil to go down any time soon.

#7 There seems to be an overwhelming consensus among oil company executives that the price of oil is going to go up in 2011. Joe Petrowski, the CEO of Gulf Oil and the Cumberland Gulf Group, recently told CNBC that “there’s 1 in 4 chance we’ll take out the $147 highs before Memorial Day.” John Hofmeister, the former president of Shell Oil, believes that American consumers could be shelling out 5 dollars for a gallon of gas by 2012.

#8 Many of the OPEC nations are indicating that they will be supportive of a rise in the price of oil in 2011. Mohammad Ali Khatibi, Iran’s representative to OPEC, said on Sunday that he expects to see 100 dollar oil very soon.

#9 The big investment banks are also expecting oil to soar in 2011. Goldman Sachs is projecting that the price of oil will reach 105 dollars a barrel next year, and JP Morgan is projecting that the price of oil will reach 120 dollars a barrel in 2012.

So what will it mean for U.S. consumers if the price of oil increases dramatically in 2011?

It will mean higher prices at the gas pump.

It will mean higher prices at the supermarket.

It will mean higher utility bills for most people.

In other words, millions of average American families that are already being stretched to the limit are about to be stretched even more.

That is really bad news for those families and it is really bad news for the U.S. economy.

Not only that, but many analysts believe that the dramatic rise in the price of oil in the summer of 2008 was one of the major reasons for the global financial collapse that happened a few months later.

Let us hope that such a thing does not happen again, but the truth is that world financial markets are so unstable today that virtually anything can send them tumbling at any time.

Without oil our economy would stop working and our entire society would shut down. The price of oil affects all of our lives every day even if we never realize it.

In 2011, the price of oil could become a really, really big story. It will definitely be something to keep a close eye on. If the price of oil goes too high it is going to start to create some tremendous imbalances in the global financial markets, and when financial markets become highly imbalanced they tend to crash.

It is important to emphasize the fact that it is not that oil and gold and silver are becoming more valuable, it is that the dollar is becoming less valuable. You should tell your US Respresentative or Senator that the time has come to abolish the UNCONSTITUTIONAL Federal Reserve. Or, maybe you will continue to bury your head in the sand. Are you with the Reds, or the Whites???

Fedup

Gas $3.29. Florida panhandle. Food, outrageous. Economy, dead.

mondobeyondo

Well, there goes the so-called “economic recovery”…

There is no doubt $100 oil is just around the corner. It’s due mostly to the falling dollar (oil is priced in dollars), but some of it is due to increased foreign consumption, speculation (is an “oil bubble” next?) and declining supply. It’s getting harder and harder to find new supplies of oil, and it takes more energy to extract it from the ground.

Soon, you’ll be trading in that SUV for a more economical means of transportation, like a horse. Yes, our country is beginning to regress to the past…

Gary

This is mainly caused by speculators bidding the price up. This needs to be illegal. Capitalism needs to go. It is inherently a easily corruptible system. We need a social democracy like Europe.

Aurelius 7

Speculators, schmeculators. EVERYONE is a speculator in some part of their life. Stockbrokers to individual/independent investors all speculate. It’s a basic fact, but you wouldn’t know that because you’re too busy touting an already failed system. Who let Gary the Socialist-Marxist out of the funny farm?

mondobeyondo

The problem is not capitalism. It is corruption.

Free enterprise, capitalism, and democracy would work well, if our politicians were honest. And once upon a time, it did happen. Ever hear of a guy named “Honest Abe”?

Unfortunately, these days, nearly everyone in high positions has been bought off or otherwise corrupted, by people and groups with their own selfish interests.

Not necessarily because they wanted to, of course. They had no choice. Andrew Jackson was nearly assassinated for trying to take down the first federal bank of the U.S. Honest Abe was assassinated. So was John F. Kennedy. And so will anyone else who stands in the way of The Powers That Be.

Obama isn’t necessarily a bad president. But he isn’t exactly running the country, either. Big banking interests and big industry are. The real rulers are Exxon, Shell, Halliburton, Wall Street, BP, JP Morgan Chase, and so forth. Obama simply does their bidding. Why else do you think he approved the GM and Chrysler bailouts? If he had not, weeelll.. there would have been, let’s say, consequences and repercussions.

Ditto for the “big bank bailout” of 2008. The lawmakers in Congress were literally blackmailed into passing it through. If they hadn’t, the big banking interests would have pulled the trigger and crashed the economy. And that’s no exaggeration, they had/have the power to do just that. Congress was forced to pass it through. Those who opposed it would have been ostracized, not to mention losing crucial financial support for re-election (oh darn, how am I gonna raise campaign funds??)

And THAT is why no one is willing to stand up.

A Dodgy Bloke

I saw the $5.00 a gallon by 2012 story yesterday, I think of that and just shudder. I read some of the stupid comments from lefties and I just shake my head. In case nobody reads overseas press this is a Global Problem, FOX, MSNBS, the New York Slime are going to tell you recovery is right around the corner. Europe is not going to save you, China is not going to save you, and some stupid ideology is not going to save you.

According to Mike Ruppert 42,000 cars a day are being sold in China 13.6 Million in 2009. These guys are having traffic jams that make any California commute look like a trip though Kansas. How are they going to power those things, water, solar, wind?

Anybody saw the Satellite photos of the empty developments in China on Bloomberg a brilliant use of resources. Your on you own Washington doesn’t give a crap, Wall Street is to busy robbing us blind. The rest of the planet is trying to save it’s own A$$, building Nukes they can’t afford, delusional (China), or ignoring what’s happening hoping it will go away or Washington fixes it.

Get ready when this thing cracks off and your not ready you will be ground into fine powder, and nobody will care.

After hydrogen, the most common thing in the universe is stupidity.” – Einstein

PS Yes I know it’s a rant but I hate stupidity!
One of the better Posts keep up the good work.

http://www.planorperish.com Gutter Economist

In addition, Hugo Chavez has quietly begun making good on his threat to cut the US out of $44 trillion worth of Gulf crude. Electric bicycles are starting to look attractive.

What do you know about oil prices? In european countries oil is for 1.2 eur/liter ~ 6$/gallon. And prices are going up every day… You have still CHEAP oil.

http://www.biorootenergy.com Jay

Quit the pity party and start focusing on what we can actually do about the economy. Like make something the world needs…and will need basically forever.

There is a very credible liquid energy solution, awaiting commercialization, and producing it makes more dollars, and sense, than any other biofuel. We challenge you to wrap your head around this bold claim and help make it happen where you live.

Green energy is peaceful energy, especially when it’s made from any carbon value, like trash and sewer sludge. Or biomass, or coal, methane and CO2. And doesn’t require a food crop or a fuel crop to produce.

It’s time move beyond the 2 dirtiest carbons (oil and coal) to fuel our world and begin using them all to synthesize clean, water-soluble and biodegradable fuel. A seamless, drop-in fuel produced in abundant quantity and used where you live, not imported from some foreign country.

Not really surprising at all… Oil hot its all time high of 141 per barrel last year. Gold has hit 1600 per ounce as of today. Get ready for HYPER inflation….2012 Looks to be the year that changes the world as we have known it… Buy GUNS and AMMO my friends Buy LOTS of AMMO

This is a extremely important issue that a lot more people today really need to be aware about. The more individuals applying this advice the better. Thank you for spreading the word. I’m a big supporter of your website!

Melvin

I’m not reaaly sure about all the 2012 stuff but it does seem a little weird that dead birds are fallin out of the sky for no reason and dead fish washing up on shore for no reason.. If gas prices go to 6 dollars a gallon the economy will crash and if it doesn’t change by 2012 or gets higher then world as we kno it today we will not see again

Too many people, too many people… We just need a good plague. A die-off of a few billion would do it…

Cameron H

I feel like when the author said “‘hot’ investment” he meant that people are expecting for oil to go up and are investing in oil going up, causing the oil to go up…like the American economy is a giant snake eating itself. Then I laughed.

Robin Cook

OK you big oil companies, cfo’s, ceos, and satan: you’re world you live in includes all the money and wealth for multi million dollar homes, cars, putting your children through any college they desire, feasting on Lobster, steak, whatever your heart desires…plenty of food in your pantry and all the servants or maids to serve it up all pretty.My world (considered middle class.) is watching my bank account daily, stressing my car and house note. My daughter must pay or get loans if she wants college.. between paychecks, its sometimes cheap pasta or sandwiches(which yes..I am thankful for!) And if you had to live this way, you’d probably fall into deep depression and think your life was over…but we try and make do..but if gas prices continue to rise..you will shut down the middle and lower class all together and then the world is yours…and then you can go and work behind the cash register at the local gas station for five dollars an hour..because the rest of the world will be shut down, no one will be able to afford to pput the gold in their tank that it requires to make it there…whats the point in filling up your car if that is all you can afford to do…I know some of this has to do with our dependancy on other countries(which we should have started to try and solve back in the 70’s when it was offered…but you all had to continue to get richer..)enjoy your wealth while the world goes to hell in that special little handbasket they talk about.

Terry

I see a lot of people on here complaining about oil prices and the economy and blaming everything on it. Remember the same people that take all the risk in investing and making their millions also run the same risk of losing it all. If you’re not willing to make those risks then you will probably stay middle class or where ever your are in life. The oil Exec’s got there by making sacrifices. Are you all willing to do the same? Sacrifice time with family or your own money? I believe in making your own destiny. The world sucks right now – so what! Deal with it and do something about it instead of blaming the economy for your situation. Do side jobs – open a small business – do something other than complain. Find something everyone can’t do without and sell it to them. Use your strengths to make money. When the economy was doing great all these “big wigs” took advantage of it. Now that’s it’s doing poorly they are prepared. Did you prepare or did you just live above your affordable life style like so many Americans did.
I was in the same situation but I did something about it. I saw opportunities and I grabbed them. I also paid for my own college. Good luck to you all.

ron

Terry how do you expect a small business to work when your competitions are the huge corporations that exploit china for labor. They get the lowest price on everything and pretty soon even their products will be too expensive. It just cost alot more with domestic labor and people can’t afford quality anymore.all I can say is prepare for hyperinflation and prepare yourself for the devaluation of the USD.